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WASHINGTON -- U.S. consumer prices recorded their largest increase in more than a year in May as costs for a range of goods and services rose, pointing to a steady firming of inflation pressures.

The Labor Department said Tuesday its Consumer Price Index increased 0.4 percent last month, with food prices posting their biggest rise since August 2011.

The uptick in price pressures should comfort some Federal Reserve officials who had worried inflation was running too low. Still, a separate inflation gauge watched most closely by the Fed continues to run below the U.S. central bank's 2 percent target.

Fed officials start a two-day policy meeting Tuesday. The Fed is expected to further trim its monthly bond buying program, but isn't seen raising interest rates until mid-2015.

A separate report from the Commerce Department showed housing starts and permits fell in May, a sign that the housing recovery could remain in slow mode. Fed Chair Janet Yellen has warned that a protracted housing slowdown could undermine the economy.

Groundbreaking for homes fell 6.5 percent to a seasonally adjusted annual pace of 1 million units in May. Permits declined 6.4 percent to a 991,000-unit pace, pulling back from the 1.06 million units touched in April.

U.S. stock index futures turned negative on the data, while prices for U.S. Treasury debt fell. The dollar hit session highs versus the yen and the euro.

"Medical care costs will help push inflation to 2 to 2.5 percent later this year. But the Fed could tolerate that," said Craig Dismuke, chief economic strategist at Vining Sparks in Memphis, Tennessee.

Last month's increase in consumer prices was the largest since February 2013 and above economists' expectations for a 0.2 percent gain. It followed a 0.3 percent advance in April.

In the 12 months through May, consumer prices increased 2.1 percent, the biggest rise since October 2012. That came on top of a 2 percent rise in April and was above economists' expectations for a year-on-year increase of 2 percent.

It was the first back-to-back 2 percent rise in the year-on-year CPI since early 2012.

Stripping out food and energy prices, the so-called core CPI rose 0.3 percent, the largest increase since August 2011. It had risen 0.2 percent in April.

In the 12 months through May, the core CPI increased 2 percent. That was the biggest gain since February of last year and followed a 1.8 percent rise in April.

Economists had forecast the core CPI rising 0.2 percent from April and 1.9 percent from a year-ago.

Food prices increased 0.5 percent in May, rising for a fifth consecutive month. Prices for meat, dairy, fruit and vegetables rose. Poultry and fish prices also increased as did the cost of eggs. Gasoline prices increased 0.7 percent. Prices for electricity also rose after declining in the prior month.

The core CPI was lifted by a 0.3 percent rise in rent. There were also increases in medical care costs, apparel, new cars prices and airline fares.

-Additional reporting by Richard Leong in New York.

With a cost per pound of potatoes near 15 cents and a retail price near $6 per pound, you're paying a 3,900 percent markup for those crispy fries. And we're not even counting the cost of trans fats to your health.

You know this one: the "latte factor" so often cited by frugalistas, but it's still worth noting. A home brew cup of joe costs about 50 cents. Spend $2.45 on a grande, and you've paid a 390 percent markup.

Those bountiful food troughs may seem like a tasty bargain, especially for those with ample appetites, but the odds favor the house. The average buffet is $12, but the servers know that most stomachs can't hold more than $8 worth of food. It's a 50 percent markup in their favor.

"Mascara will expire in three months, whether you buy it from CVS or Chanel," the report says. "When deciding how much to spend, think about the lifetime of each item. Case in point: drugstore mascara will cost you about six cents per use, whereas Chanel will cost you about 33 cents -- and you probably won't finish using either before the expiration date." Bottom line: You're paying an extra $25 -- a 450 percent markup for –- for the brand on the bottle.

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gildersleeve9

Airfare prices? Really. Who the hell can afford to travel when we work 65 hours a week just to feed our kids and keep a roof over our heads? Inflation just means my decent hourly pay is eroding every year. So I make less this year then last. Why do they want inflation? I sure as hell don't because it makes my meager investments worthless.

The cost of everything that people actually NEED (like food, clothing, fuel, rent/housing, health care, utility costs, etc.) is going up every month.

But, still, the Fed is "worried about inflation being too low". And the "core CPI" is set to measure things like airline fares and new car prices. (I guess they actually think the average person takes a plane trip and buys a new car, every month.)

If this mess wasn't so crazy --- it would be funny. (Look up the word "clueless" in the dictionary. There is a group photo of the Fed members there.)